Bloomberg Reporters’ Practices Become Crucial Issue for Company

Most journalists dream of uncovering government corruption, landing a big interview or winning a Pulitzer Prize. But those are not the goals that Thomas F. Secunda, who co-founded Bloomberg L.P. in 1982 with Michael R. Bloomberg, has in mind.

“The only journalism that matters is the kind that moves markets,” Mr. Secunda told the senior staff of Bloomberg News during a recent discussion in the seventh-floor auditorium of the company’s Lexington Avenue headquarters, according to one former Bloomberg journalist in attendance.

The question of how exactly some of those Bloomberg reporters may have uncovered market-moving information has become a critical one for the company.

In April, Goldman Sachs complained that a reporter had monitored an executive’s activities on the Bloomberg machine, the ubiquitous financial terminal that contains a mind-boggling array of information about economies, companies, markets and people, including Bloomberg’s own customers. The revelation prompted inquiries from more than 20 customers, including Bank of America, the Federal Reserve, the Treasury Department and the European Central Bank. Daniel L. Doctoroff, chief executive of Bloomberg, apologized, calling the reporting practice a “mistake.”

But interviews with more than 30 current and former Bloomberg employees paint a picture of an aggressive, hyperkinetic organization that not only tolerated but encouraged an unusual symbiotic relationship between the company’s news operation and its business interests, including the use of the terminals to break news.

Many of these reporters say they routinely used the terminal’s function, called the UUID command, to find background information on subscribers, including contact information, when the subscriber had last logged on, and weekly statistics on how often customers used a particular function, like equity shares or currency markets.

Reporters also say they talked to their business-side colleagues to gain early access to company announcements, including company releases and bond prospectuses about to be made public, and queried Bloomberg’s own help desk to find out what pages and features customers might have been using.

“We were told again and again and again, find ways to use what’s on the terminal to write stories,” said one former Bloomberg reporter who, like most employees, was required to sign a strict nondisclosure agreement that prohibits them from speaking about the company. “They never said ‘Oh, please be careful and don’t breach any kind of privacy,’ ” the former reporter said.

A senior Bloomberg executive not authorized to speak for attribution confirmed the reporter’s account. “It’s not like this was some deep Bloomberg secret,” this executive said. “If it’s on the terminal, we’d say go for it.”

In the opaque world of Wall Street where traders tightly protect every shred of information, the privacy breach threatens to undermine Bloomberg’s core terminal business — which takes up 26 floors at Bloomberg’s New York headquarters, compared with four floors for the news unit. Bloomberg leases more than 315,000 of its roughly $20,000-a-year financial data computers, which made up 85 percent of the company’s 2012 revenue of $7.9 billion.

After Goldman complained, Bloomberg immediately shut newsroom access to the UUID function. Mr. Doctoroff promised an independent inquiry to be led by Samuel J. Palmisano, the former chairman and chief executive of I.B.M., who is a board member of Mr. Bloomberg’s charitable group. Mr. Doctoroff also appointed a senior executive to the newly created Bloomberg position of client data compliance officer.

Although Bloomberg has acted swiftly, several people close to the company said executives considered the controversy overblown, fanned by Wall Street banks frustrated with aggressive news coverage and eager to negotiate cheaper rates for terminals. Bloomberg controls more than a third of the $25.5 billion financial data services market, according to Burton-Taylor International Consulting.

Competitors have already pounced. At an investor conference on May 28, Lex Fenwick, chief executive of Dow Jones & Company, publisher of The Wall Street Journal, and former chief executive of Bloomberg L.P. introduced a Dow Jones messaging system which, he said, would be “strictly stored on your servers and we can’t see what you’re saying to each other.”

Yvonne Diaz, a spokeswomen for Thomson Reuters, said “there are strict controls in place that prevent any Reuters or other staff outside of the development and customer service groups from accessing” customer data. But in a sign of just how competitive the market for financial news and analytics has become, Thomson Reuters allows a tier of select clients early access, by two seconds, to consumer sentiment data through an agreement with the University of Michigan. The unusual arrangement was first reported by CNBC.

A Bloomberg spokesman, Ty Trippet, said that while management did encourage the use of terminal data in reporting, the company did not condone looking at confidential customer information, and all new employees were required to sign a confidentiality agreement that prohibited them from doing just that. He also pointed out that reporters could never see a subscriber’s specific trades, securities or news articles they had viewed.

Matthew Winkler, editor in chief of Bloomberg News, who called the practice of reporters looking at subscribers’ data “inexcusable,” said it dated back to the 1990s. “I have always been clear, as have our editors, that client trust is very important to us and we should always follow the highest ethical standards of reporting.”

The concept of reporters working hand-in-hand with the sales team served as a centerpiece to Mr. Bloomberg’s vision when he hired Mr. Winkler away from The Wall Street Journal in 1990 to build a different kind of newsroom. “Most news organizations never connect reporters and commerce,” Mr. Bloomberg wrote in “Bloomberg by Bloomberg,” a 1997 autobiography written with Mr. Winkler’s help. He added: “At Bloomberg, they’re as close to seamless as it can get.”

For years, Mr. Winkler told journalists to visit customers at banks and money management firms, often alongside sales staff, to help push the wonders of the terminals and to ask customers what types of news articles they’d like to read.

“It’s very much a trading floor culture,” said Chris Roush, a journalism professor at the University of North Carolina at Chapel Hill who worked at Bloomberg in the late 1990s.

Since the 1990s, reporters have been trained and tested on the terminal’s 15,000 functions. Many of them leave the weeklong training session baffled by the machines — which one employee likened to a “Soviet tank of an operating system.” But others, especially those who cover the core beats of business and finance, try to one-up each other on grasping the intricacies of the terminal tools.

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Thomas F. Secunda, who co-founded Bloomberg L.P.CreditBloomberg L.P.

“You could see a map of every ship at sea that has cargo carrying orange juice,” said one reporter who recently left the company. “Or, someone would say ‘Check out UUID. Ben Bernanke was logged on today.’ ”

The ability to produce market-moving news had financial rewards for journalists: it was among the top metrics in determining reporters’ performance in 2012, according to a copy of the company evaluation obtained by The New York Times. The drive for market-moving news only added to the allure of tapping into the terminals’ troves of data, said several of the current and former reporters interviewed.

Peter K. Semler, who started Bloomberg’s Italy bureau in the 1990s, remembered using UUID to trace, for example, where the chief executive of Fiat had logged on. “If you see the guy in Chicago or Kansas you can guess what he’s doing,” said Mr. Semler, who left the company in 1995, and founded the financial news service Capitol Intelligence Group, which competes with Bloomberg.

“Reporters, we’re snoopy guys. We read everyone’s stuff,” Mr. Semler added. “If you had access to something you weren’t supposed to have, the first thing we’d do was go into that.”

In 2011, a Bloomberg Television reporter said on air he had used the terminals to monitor the rogue UBS trader Kweku Adoboli. After Bloomberg was the first to report on Bruno Iksil, the JPMorgan Chase trader nicknamed the London Whale, bank executives questioned Bloomberg on whether reporters had snooped on Mr. Iksil’s terminal activity. Mr. Trippet, the Bloomberg spokesman, said he was not aware of any such complaints.

The question of how extensively Bloomberg reporters looked at customer information went beyond the Bloomberg terminal. Reporters have, for example, contacted colleagues on a team known as “fundamentals” that processes information that subscribers distribute over the terminals. That information can include analysts’ reports, company announcements and bond prospectuses.

“We had news calling us all the time. Is it public information? Yes. But did we get it 30 seconds before the public? Yes,” said one longtime employee. “News and data are married. It’s always been like that.”

Mr. Trippet said he was unaware of any company announcements or analyst reports made available to data analysts before others receive them. “There are strict safeguards to prevent unauthorized distribution of this information,” he said.

Two people with direct knowledge of the situation said reporters had contacted the customer help desk to ask about what sources were having problems with, gleaning hints that informed reporting.

The practice worked both ways. The company encourages the help desk to connect a customer to a reporter if, for example, the customer has a question about a news article on Turkey, said the senior Bloomberg executive. And a former editor at Bloomberg News said members of the sales team requested at least a half-dozen positive articles about a business or individual that could help them lure a new subscriber. (This person said, however, that none of those requests resulted in articles.)

“It’s a specialized audience with subscribers with expectations that are different than that of a daily newspaper,” Norman Pearlstine, chief content officer at Bloomberg L.P., said in an interview. “These are subscribers paying a lot of money for information that will help them make money,” he added.

A version of this article appears in print on , on Page A1 of the New York edition with the headline: Bloomberg Reporters’ Tactics Become Crucial Issue for Company. Order Reprints | Today’s Paper | Subscribe